The Pensions Administration Standards Association has urged providers to prioritise the payment of pensions as it struggles with the challenges of working remotely, while the Covid-19 pandemic could affect the automotive industry and financial instruments backing lease deals. Elsewhere in our round-up of daily market moves and pensions updates, one asset manager says schemes should be wary of inferring a bounceback from calming stock markets.
Equities stable as volatility begins to ease
UK and European stock markets eased upwards on Monday, shrugging off record lows in the oil price as volatility eases from its spike last week. The FTSE 100 and Stoxx 600 rose 0.96 per cent and 1 per cent respectively, while the more domestic-focused FTSE 250 index closed down by 0.97 per cent. In the US, the S&P 500 was trading up at pixel time, despite oil crashing to its lowest price in 18 years amid the coronavirus demand drop. The popular Vix index of US equity volatility continues to fall. UK gilt yields remain stubbornly low, however, falling across the curve on both daily, monthly and yearly measures.
While an element of stability may be returning to markets, investors should be wary of calling a rebound, according to Insight Investment. It highlighted three key factors to monitor: the speed at which the inevitable spike in unemployment eases, lingering constraints on supply chains, and the possibility that even after the outbreak subsidies, consumers are cautious to spend or change their habits.
PASA releases Covid-19 guidance for administrators
The Pensions Administration Standards Association has urged providers to prioritise accuracy, record-keeping and the payment of pensions falling due, as it struggles with the challenges of working remotely. Launching guidance for the sector, PASA admitted that service levels may slip, and companies’ ability to adapt will depend on their prior investment in technology and systems. But it said that all providers should take basic steps to ensure business continuity, including reviewing cash flow policies and communicating with members about changes. Kim Gubler, PASA chair, commented: “In a remote working environment, this means basic enablers must be in place. Administrators must focus on the processes of greatest benefit to members. We also highlight best practice for those administrators with more advanced operations able to demonstrate higher level enablers.” The guidance, which was backed by the Pensions Regulator, can be foundhere.
Trouble in car finance?
The impact of the coronavirus pandemic threatens to burst a bubble in the car financing sector, according to the Daily Telegraph. Car dealerships have now been forced to close, and ratings agency S&P has slashed its already low expectations for car sales, according to the newspaper. Elsewhere, the impact of mass unemployment could feed through to the car finance sector. Nine out of 10 retail sales reportedly completed via financing deals, and on Friday Auto Finance News reported that the outlook for loan and lease asset-backed securities – the packages used to sell this risk to investors – has dropped from stable to negative.
